Archive for the ‘Banks’ Category

How many Angels does it take to change our world?

Monday, August 3rd, 2015

Today at 11am, our Chair and Founder is going to receive a welcome cheque for our Gloucestershire operation. This donation is from our good friends at Angels 4 Angels, a well – respected Angel investment company based in the County, who also contributed to us last year.

Donations from individuals and companies are always especially welcome. Why is that? Because they are voluntary donations from people and organisations who understand what we do. They understand that four letter-word – Risk. And many or most successful business people know that risk is an integral part of business success. There are few, if any, well-heeled entrepreneurs who, at some time, have not suffered sleepless nights and chewed finger nails to reach the top of their game. A quick glance at James Dyson’s story illustrate this so clearly. How many of us would have the courage he had in those early years?

Many of our stakeholders think the Government should support our efforts more wholeheartedly; and we often think that ourselves; but Governments can be capricious and find it hard to think and plan in the long-term. And they change. With each new Minister comes a fresh set of values and a different degree of understanding. Like a slightly slower version of speed-dating, relationships are sought and nurtured, just when the bell rings to move on.

One of our ambassadors wrote a few years ago that ‘There is no greater privilege, when you have reached the top floor, than to send the lift down to help the next person.’ There are many business people out there who think and act the same. Although you don’t get much glory for doing so, we say Thank You. And more importantly, so do the hundreds of business starters we will help over the coming years. Angels indeed!

Walk taller by staying small

Tuesday, July 14th, 2015

As I write this, we are discussing our forthcoming regulation by the FCA. It seems sometimes that we, as a small charity, are paying for the sins of the global banks, for we will be under the same strict regime. Sledgehammer, nut; nut, sledgehammer Although it will increase our workload significantly, it holds no fears for us as we always aim to be honest and open in our dealings.

We are also being asked to sign the European Code of Good Conduct. Most of it is a mixture of good practice and common sense. It does beg the question: if the European Central Bank had followed its guidelines, would countless billions have been loaned so unwisely to Greece?

There is a principle here, if one were to be cynical: the bigger the institution, the greater the temptation to use and abuse the system. It starts with a joke in a City wine bar, and ends with LIBOR. Once discovered, the new regulation imposed on the sinners affects everyone else in the same industry. It’s not unlike going to a rock concert at Wembley, and each of the 80,000 crowd being frisked at the turnstiles because two drunken idiots were caught taking drugs behind the stage.

So, small is good, and can be great. Small values relationships, small is accountable, flexible and innovative. Small is, ideally, local. What is the reverse of ‘If it’s too big to fail, it’s too big’? How about ‘It’s too small to be noticed but too important to ignore’?

5 Lies about Microfinance in the UK

Monday, July 6th, 2015

1. Microfinance is only needed in the Third World, mostly in Africa.

Try telling that to the 1,300 businesses who have used our services to date. The UK has a particular need for this kind of support for small businesses. It’s banking is still dominated by very large national banks, with no regional or local banks, unlike the US and a large part of Western Europe. Big banks can’t do microfinance – it’s too expensive and too risky; and they would most likely argue that it was sub-prime lending that got them into such a mess in 2008, so why should they? While we welcome new initiatives, like Metro Bank, Handelsbanken and a swathe of peer to peer lenders, they have yet to make a big impact in the market; and are understandably not wishing to focus on the most risky sector of it.

2. If people have a low credit rating, they don’t deserve to start their own businesses.

Sad to say, this is a strong view held by many in the UK. There are many reasons why people have a less than perfect credit score, and we see such examples on a weekly basis. These include a partner or spouse walking out of a relationship leaving a trail of debt for the  remaining partner to manage; prolonged illness resulting in loss of employment, bereavement, and even, yes, people who have no credit cards and have never borrowed anything. Sometimes, bad mistakes or poor judgement can lead people into building up a mountain of debt. But most people learn from these mistakes, and handle their money better as a result. This is why Fredericks looks at every application on a case by case basis and takes everything into account before making a decision.

3. The Government does all that stuff through the Start Up Loan Company

This organisation has made an enviable job of raising the profile of business start ups in the UK over the last few years, and can point to some impressive case studies as a result. But over the last 12 months it has been quietly withdrawing from the riskiest propositions under the guidance of its new masters at the British Business Bank. In its own words, it acknowledges a ‘discrepancy between the risk appetites of Fredericks Foundation and SULCo.’

4. A microloan is too small to make a difference to someone.

Well that’s just silly. It can pay for a vehicle so you can deliver the goods or services you are offering, allow you to rent a  market stall or small retail unit; it can pay for an e-commerce web site; pay for you to build up enough stock to sell, provide a bit of working capital to enable you to buy some time to raise your profile or implement a sales campaign.

5. Microfinance just deals with hopeless cases.

Depending on how you interpret that, it is either a patronising and offensive generalisation, or true. It is true in the sense that most people who are unable to access finance from family, friends, banks or even the Government find it easy to lose hope. By the time they have encountered us, and find there are experienced and approachable people who are willing to listen, understand them, and believe in them, then that sense of hopelessness just evaporates….

….and that is one of the joys of what we can achieve. If you fancy applying for a loan, or joining the fun and helping us by volunteering or supporting us or simply helping to finance our work, please get in touch. Jut go to www.fredericksfoundation.org . It’s a great place to start!

 

 

 

 

Too small to be noticed. Too important to be ignored.

Friday, June 19th, 2015

That was Napoleon. Rumoured to be 5’2″, his stature was somewhat lower than average. His actual role on the world stage was not diminished in any way by this. He was a giant in French history, thankfully to meet his reckoning at Waterloo. But for the superior allied strategy, Britain might now be under French governance; enjoying 30-hour working weeks, superlative wine and 2-hours for lunch. How we could have suffered.

However, Fredericks plays a similar diminutive role in the nation’s economy. Most of what we achieve is not recognised or appreciated at a national level. Our impact is a mere drop in the ocean of business lending in the UK; a minnow among sharks.

Drill it down to a local, and human level, and we are changing lives every day. Our army of volunteers, our skilled staff, our investors enable Fredericks to equip people to make their dreams a reality. When the world, the banks, the Government, the credit reference companies say ‘no’, and you can’t, you never will, don’t be silly, we delight in saying ‘Yes, we think you can.’

The power of enabling people to start their own business is potent, and drives us to often work exhausting hours and travel endless miles to help people. And our volunteers often do the same for no financial gain.

Our own Waterloo is to be invisible. That is our greatest worry. We need to be more visible on the battlefield for funding, And we cannot do that alone. We would ask everyone who has a relationship with us to shout long and hard about what we achieve; the crucial part we play in the sub-prime lending market, the hope we can give those whose ambitions have been blocked. Tell your friends, your family, your MP, your local authority.

If it is not too much of a stretch, France without their vertically-challenged leader would be a poorer place. The UK economy, without its small band of community funds would be a sadder and less prosperous place. It is time to stand up and say so!

Swimming lessons

Wednesday, October 22nd, 2014

I was fortunate enough recently to spend time in Somerset and to listen to Lydia and Annie tell me about some of the early lessons from our work with the excellent Yarlington Housing Group.

The first should be no surprise. Good things don’t come quickly or easily. It takes time to build confidence and to build a mindset to deal with the challenges that running your own business will inevitably throw up. Particularly so when the popular perception of making a business is influenced by TV programmes like Dragons’ Den or The Apprentice. Interesting television as these programmes may be, they are not the reality of 99% of self-employed people.

Building self-confidence in people who have skills and experience involves care and attention. As does equipping them with a range of strategies to deal with things such as selling, winning contracts and getting bills paid. I have seen examples where excited would-be-entrepreneurs are metaphorically shown a few videos of Rebecca Adlington and are then thrown into the business ‘deep-end’ and told to swim. Women and men come at this from many different directions, some take to running a business like proverbial ducks to water, others are more like me getting into the North Sea. It takes a long time and there are nearly as many backward steps as there are forward ones.

The second clear lesson emerging, which again shouldn’t come as a bolt from the blue, is that before anyone can take on the financial side of running a business they have to get their personal finances in order. At Fredericks we know this because we lend money. But even if your business doesn’t need any finance to get going, you should not start generating income if you can’t keep track of money in and money out.

I learnt a lesson about financial exclusion recently when an applicant took the responsible route and went of their own volition to Step Change, a debt advice charity, to make arrangements with their creditors. Absolutely the responsible thing to do. If your debts are not both out in the open and under control we won’t be lending you any money. The bad news is that this very act excluded them from the subsidised rates of the government’s Start Up Loan scheme. So first they are denied credit from banks by their own credit history, and then they are denied access to state support because they have tried to get their credit record in order.

Only about one third of the people who apply to us now qualify for the government’s Start Up Loans. To my knowledge Fredericks is the only lender offering responsible credit to people who cannot access the government scheme. Not even the CDFI sector is daring to tread here. Our first successful Yarlington applicant didn’t qualify, but we still supported him.

My point is though, that we are here to help, coax and cajole those whose confidence is lowest and whose lives are the most chaotic because that is where the need is greatest. Exclusion comes in many forms, but where there are people who have the courage to take control of their lives we should be going the extra distance to support them.

Independence Road www.independenceroad.co.uk @IndependenceRd is a joint project between Outset and Fredericks Foundation.